'The clock is ticking' on Congress to deal

Tax cuts, jobless aid could end for millions

House Republicans (from left) Adam Kinzinger, Mike Kelly and Bill Johnson address reporters after rejecting the two-month plan agreed to by the Senate and President Barack Obama in favor of trying to achieve a full-year one.

Susan Walsh/Associated Press

Nancy Pelosi and her fellow Democrats in the House tried in vain Tuesday to pass the Senate's two-month extension of a Social Security payroll-tax cut and jobless benefits for millions of long-term unemployed.

Susan Walsh/Associated Press

WASHINGTON -- Congress lurched toward Grinch-like gridlock on Tuesday as the Republican-controlled House rejected a two-month extension of Social Security tax cuts that President Barack Obama said was "the only viable way" to prevent a drop in take-home pay for 160 million workers Jan. 1.

"The clock is ticking, time is running out," Obama said shortly after the House voted 229-193 to request negotiations with the Senate on renewing the payroll tax cuts for a year, along with jobless benefits for millions of long-term unemployed.

House Speaker John Boehner -- told that Obama had sought his help -- replied, "I need the president to help out."

His voice rose as he said it, and his words were cheered by dozens of Republican lawmakers who have pushed him and the rest of the leadership to pursue a more confrontational strategy with Democrats and the White House in an already contentious year of divided government.

This time, it wasn't a partial government shutdown or even an unprecedented Treasury default that was at stake, but the prospect that payroll taxes would rise and long-term unemployment benefits end for millions of jobless victims of the worst recession since the 1930s.

Whatever the stakes, there was little indication that Republicans would get their wish for negotiations with the Senate any time soon. Senate Majority Leader Harry Reid, D-Nev., issued a statement saying he would be happy to resume talks on a yearlong measure -- "but not before" the House ratifies the two-month bill and sends it to Obama for his signature.

Given Obama's remarks and Reid's refusal to negotiate, it was unclear what leverage Republicans had in the year-end standoff. It appeared likely the partisan disagreement could easily persist past Christmas and into the last week of the year.

Democrats pounced on Republicans for rejecting the bill, emboldened by polls finding Obama's approval rising and that of the congressional Republicans fading.

For his part, Boehner sent a letter to Obama, noting that he had requested a yearlong extension of the tax cut and the House had approved one.

"There are still 11 days before the end of the year, and with so many Americans struggling, there is no reason they should be wasted," he wrote, asking Obama to call the Senate back from its year-end vacation.

In an appearance before White House reporters, Obama said Republicans would be to blame for the consequences of a standoff.

"Right now, the recovery is fragile, but it is moving in the right direction," he said. "Our failure to do this could have effects not just on families but on the economy as a whole."

As recently as Friday, it appeared a compromise was in sight on the legislation.

After efforts to agree on a yearlong extension sputtered, Senate Republicans and Democrats agreed on the two-month renewal, with the bill's estimated $35 billion cost to be covered by an increased fee on mortgages backed by Fannie Mae and Freddie Mac. That assured deficits wouldn't rise, a key Republican objective.

Republicans also prevailed on their demand to require Obama to decide the fate of a proposed Canada-to-Texas oil pipeline within 60 days. The president's political supporters are divided on the Keystone XL project, with environmentalists generally opposing it and blue-collar unions in favor.

Stalemate in Congress

What happened Tuesday: The House voted against the Senate's two-month extension of payroll-tax cut and jobless benefits, hoping instead for a one-year deal.

What's at stake: If Congress doesn't break the stalemate and pass a bill by the end of the year, the Social Security payroll tax will go up two percentage points, or about $20 a week for a worker making a $50,000 salary, an average increase of about $1,000 per year; almost 2 million people could lose jobless benefits, which average about $300 a week for the long-term unemployed; and doctors would bear a 27 percent cut in Medicare payments.

What's next: The Senate left town for the year with no plans to come back. Senate Majority Leader Harry Reid, D-Nev., ruled out talks on a yearlong plan until the House passes the two-month deal. House Speaker John Boehner urged President Barack Obama to "call on the Senate to return to appoint negotiators." Obama replied by calling on House Republican leaders to approve the Senate bill, saying that it was the only way forward.